A capital gearing trust is a type of trust that uses debt to finance its investment activities. The trust borrows money from investors and then invests the borrowed funds in a portfolio of assets, such as stocks, bonds, and real estate. The income generated from the investments is used to pay interest on the debt and to fund the operations of the trust.
Capital gearing trusts are typically structured as closed-end investment vehicles, which means that they do not redeem their shares.
The Capital Gearing Trust is a publicly traded investment trust that was established in the United Kingdom in 1961. The trust is managed by Henderson Global Investors and its objective is to provide shareholders with long-term capital growth through a diversified portfolio of global equity investments.
The trust’s portfolio consists of approximately 50 stocks from around the world, with a focus on large cap companies.
The trust has a strong track record of outperforming its benchmark, the MSCI World Index, on a 3-, 5-, and 10-year basis.
If you’re looking for an investment that will give you exposure to some of the world’s largest and most successful companies, then the Capital Gearing Trust may be worth considering.
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Capital Gearing Trust Review
Capital Gearing Trust PLC is a closed-end investment company that was established in the United Kingdom in 1925. The trust’s objective is to provide shareholders with long-term capital growth through investing in a portfolio of UK and international equities. As of December 31, 2020, the trust’s assets totaled £612.5 million (US$847.6 million).
The trust is managed by an experienced team of investment professionals at Henderson Global Investors Limited, which has been managing investments for over 85 years. The team employs a rigorous research process and active management style to generate alpha and deliver strong returns for shareholders over the long term.
Since inception, Capital Gearing Trust has delivered an annualized return of 11.1%, outperforming its benchmark index, the FTSE All-Share Index, by 3.9%.
For the year ended December 31, 2020, the trust’s net asset value (NAV) total return was 10.4%, while its benchmark returned 6.5%. Over the past five years, Capital Gearing Trust has delivered an annualized NAV total return of 12.2%.
Credit: moneyweek.com
Is Capital Gearing Trust a Good Investment?
Capital Gearing Trust is a long-term investment trust which aims to provide shareholders with capital growth through exposure to a diversified portfolio of global assets. The trust is managed by James Harries and his team at Henderson Global Investors, who have over 20 years’ experience in managing global investments.
The trust’s portfolio is diversified across a range of asset classes and geographical regions, with a particular focus on developed markets.
The aim is to achieve a return in excess of the benchmark, the MSCI All Country World Index (ACWI), over the long term.
So far this year, the trust has outperformed its benchmark index, returning 8.6% compared to the ACWI’s 5.8%. This strong performance has been driven by positive contributions from a number of holdings including Google, Facebook and Tesla.
Overall, we believe that Capital Gearing Trust offers investors an attractive way to gain exposure to a diversified portfolio of global assets with the potential for long-term capital growth.
What is Capital Gearing?
Capital gearing is a financial ratio that measures the extent to which a company is financed by equity capital as opposed to debt capital. The higher the ratio, the more equity financing a company has relative to debt financing.
Capital gearing can be an important factor in assessing a company’s financial health and stability.
A high level of debt financing relative to equity can make a company more vulnerable to economic downturns and other risks. Conversely, a lower level of debt financing relative to equity can give a company more flexibility and buffer against potential shocks.
Thus, capital gearing is one metric that investors and analysts use when considering whether or not to invest in a particular company.
It is also an important consideration for companies themselves when making strategic decisions about their financing mix.
Who Runs Capital Gearing Trust?
Capital Gearing Trust is a UK-based investment trust. The company is run by an experienced team of investment professionals who have a track record of delivering strong results for shareholders.
The team is led by Managing Director, Stephen Yiu, who has over 25 years of experience in the financial services industry.
He is supported by Investment Manager, Nick Purves, and a team of analysts and researchers.
Capital Gearing Trust plc is authorised and regulated by the Financial Conduct Authority (FCA).
What is Investment Trust Gearing?
An investment trust is a type of company that invests money in other companies, much like a mutual fund. However, unlike a mutual fund, an investment trust can borrow money to invest, which is known as “gearing.” This gearing can magnify the returns of the trust if the investments perform well, but it can also magnify the losses if they do not.
Gearing is a way for an investment trust to increase its exposure to an underlying asset without having to raise more capital from shareholders. For example, if an investment trust has £100 million in assets and borrows £10 million to invest in additional assets, its gearing ratio would be 10%.
If the value of the assets held by the trust increases by 10%, then the value of the trust itself will increase by 20% (10% + 10% = 20%).
Conversely, if the value of those assets decreases by 10%, then the value of the trust will decrease by 20%. As you can see, gearing can amplify both gains and losses.
Many investors view geared trusts as being riskier than ungeared trusts because of this amplified effect.
However, some investors are willing to take on this extra risk in pursuit of higher returns.
Conclusion
The Capital Gearing Trust is a UK-based investment trust that invests in a portfolio of global companies. The trust is managed by Schroders and has been in operation since 1986.
The trust’s objective is to provide shareholders with long-term capital growth through investment in a diversified portfolio of global companies.
The trust’s portfolio is currently made up of around 80 companies, with the largest holdings being in the US, Japan, and the UK.
The trust is listed on the London Stock Exchange and has a market capitalisation of £1.6 billion as of May 2020.
